Panetta urges China to increase military contacts to avoid missteps

BEIJING (Reuters) - U.S. Defense Secretary Leon Panetta urged China on Tuesday to expand military relations with the United States to reduce the risk of a confrontation, even as the two powers grappled with a volatile territorial dispute between Beijing and Tokyo.

Panetta, on his first trip to China as defense secretary, acknowledged differences between the two countries over maritime security in East Asia, but said better ties would "advance peace and stability and prosperity in the entire Asia-Pacific region."

Panetta and Chinese Defence Minister Liang Guanglie said they had candid discussions on the difficult issues confronting the two countries, including U.S. arms sales to Taiwan, the shift in U.S. strategic focus to the Asia-Pacific, cybersecurity and the territorial dispute between Beijing and Tokyo.

Panetta's trip to Beijing for talks with senior Chinese military and government leaders has coincided with an eruption in tension over rival claims by Japan and China to a cluster of islands in the East China Sea.

Anti-Japan protests have flared across China in recent days, including attacks on Japanese cars and restaurants.

"With respect to these current tensions, we are urging calm and restraint by all sides and encourage them to maintain open channels of communication in order to resolve these disputes diplomatically and peacefully," Panetta said.

Liang said China's claim to the islands, known in China as Diaoyu and in Japan as Senkaku, dated back to the Ming dynasty. He blamed the Japanese government's purchase of the islands from a private Japanese owner last week as the source of the current conflict.

But Liang said China hoped for a peaceful settlement of the dispute.

"We reserve rights for further actions," he told a news conference. "Of course, that being said we still hope for a peaceful and negotiated solution to this issue."

Panetta's three-day visit to China is part of an effort to bolster military-to-military ties between the two countries and avoid the kind of on-again, off-again relationship they have had in the past. The two resumed contacts less than two years ago after a breakdown in ties over U.S. arms sales to Taiwan.

Panetta will meet Vice President Xi Jinping, who is expected to assume the presidency next year, and will visit a Chinese naval base that serves as headquarters of the North Sea fleet.

U.S. defence officials say they believe deeper military relations with Beijing can help avoid friction and misunderstanding as China engages in a major effort to modernize its military and the two services come into increasing contact.

Pentagon officials have long complained that China has not been candid enough about its rapid military build-up, whereas Chinese officials have accused Washington of viewing their country in suspicious, "Cold War" terms.

"Our goal is to have the United States and China establish the most important bilateral relationship in the world, and the key to that is to establish a strong military-to-military relationship," Panetta said in remarks to a meeting of the two defence staffs.

"The key is to have senior level actions like we are engaging in that reduce the potential for miscalculation, that foster greater understanding and that expand trust between our two countries," he added.

Panetta said that in order to further build ties, the United States had invited a Chinese warship to participate in the 2014 Rim of the Pacific exercises, a U.S.-sponsored large-scale naval exercise involving more than 20 countries.

Liang said the two also discussed U.S. arms sales to Taiwan, the shift in U.S. strategic focus to the Asia-Pacific, territorial issues in the South China Sea, cybersecurity and outer space.

"Better communications on the aforementioned topics are very helpful, useful, for mutual understanding of our respective positions and stances," Liang told reporters. "It will also help reduce suspicions (and) build trust."